{"id":31322,"date":"2018-10-27T13:08:52","date_gmt":"2018-10-27T07:38:52","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=31322"},"modified":"2018-10-27T13:08:52","modified_gmt":"2018-10-27T07:38:52","slug":"new-rbi-norms-to-spur-surge-in-npas","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/new-rbi-norms-to-spur-surge-in-npas\/","title":{"rendered":"\u2018New RBI norms to spur surge in NPAs\u2019"},"content":{"rendered":"<p><a href=\"http:\/\/www.thehindu.com\/business\/Economy\/new-rbi-norms-to-spur-surge-in-npas\/article22745297.ece\"><b>\u2018New RBI norms to spur surge in NPAs\u2019<\/b><\/a><\/p>\n<p><b>Context:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Early identification of stress and resolution will prevent future ever-greening, says Moody\u2019s unit ICRA<\/span><\/li>\n<\/ul>\n<p><b>Reserve Bank of India\u2019s new norms:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The Reserve Bank of India\u2019s new norms directing banks to start insolvency proceedings on accounts, if stress is not resolved in 180 days, could result in a jump in bad loans, according to Moody\u2019s unit ICRA.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The revised framework on resolution of stressed assets issued by RBI is likely to increase the reported non-performing asset (NPA) levels of the banks in coming quarters,\u201d ICRA said.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The RBI said that for accounts where a bank\u2019s exposure exceeds <\/span><span style=\"font-weight: 400;\">\u20b9<\/span><span style=\"font-weight: 400;\">2,000 crore, a resolution plan must be implemented within 180 days from the date of first default.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">In case a resolution is not implemented, lenders should file an insolvency petition within 15 days of the expiry of the 180 days.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The RBI had sent two lists of firms against which insolvency proceedings could be taken at the National Company Law Tribunal.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Banks have to make a 50% provision in respect of accounts that are subject to insolvency proceedings.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"> \u00a0\u00a0<\/span><span style=\"font-weight: 400;\">In comparison, the provisioning norm for sub-standard assets is 15-20%.<\/span><\/li>\n<\/ul>\n<p><b>Proactive resolution:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The RBI norms, announced entail proactive resolution of stressed assets with lenders needing to finalise the resolution plan as an account slips into special mention account category.<\/span><\/li>\n<\/ul>\n<p><b>Special mention account category.<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">SMA category indicates the time period over which repayment on a loan has not been made.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Banks\u2019 gross NPAs and standard restructured advances were estimated at 12.6% as on September 30, 2017.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The RBI had estimated SMA 2 advances (where repayment is not made for more than 60 days) to be 3.5% of gross advances.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">ICRA said overall stress levels of banks including SMA0 (overdue between 1 and 30 days) and SMA1 (overdue between 31 and 60 days) borrowers was much higher than the reported GNPA level of 10.3% as on September 30.<\/span><\/li>\n<\/ul>\n<p><b>Benefits:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Early identification of stress and resolution will prevent future ever-greening of loans.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"> \u00a0<\/span><span style=\"font-weight: 400;\">It will ensure a good financial health for the banking system in the long-term.<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>\u2018New RBI norms to spur surge in NPAs\u2019 Context: Early identification of stress and resolution will prevent future ever-greening, says Moody\u2019s unit ICRA Reserve Bank of India\u2019s new norms: The Reserve Bank of India\u2019s new norms directing banks to start insolvency proceedings on accounts, if stress is not resolved in 180 days, could result in&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/new-rbi-norms-to-spur-surge-in-npas\/\">Continue reading <span class=\"screen-reader-text\">\u2018New RBI norms to spur surge in NPAs\u2019<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[],"class_list":["post-31322","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704796637},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/31322","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=31322"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/31322\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=31322"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=31322"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=31322"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}